Another Cedar Fair / Six Flags merger rumor (Reuters)

[Leland Wykoff]

Where to begin with this delicious story of a FUN/Six merger-in-the-works? 

Lets start with former Cedar Fair CEO, and Board Member, Matt Ouimet's rather unusual statement, September first, as he unexpectedly resigned his FUN board seat and special role overseeing development and acquisitions:

"I am extremely grateful to have been a member of the Cedar Fair management team and board of directors, I have great confidence in the Company's current leadership team and will enjoy following their future successes."

As I noted and posted in this forum at that time:

"Could Ouimet be foreshadowing a similar future role with another company overseeing acquisitions and development of entertainment, waterparks, amusement parks, and resorts?  A position in which he would be looking for strong management teams overseeing portfolios of desirable cash flow positive properties ripe for application of Intellectual Property assets to leverage value, attendance, and profitability? 

If so, Ouimet would be keen to "enjoy following [Cedar Fair's] future successes" and possibly being a part of that bright future."

And here we are. 

Meanwhile news at Disney has gone from bad to worse.  In the last week Disney news progressed into the realm of bleakness: Daily Wire announced, on Disney's 100th anniversary no less, they would be releasing a live action film adaptation of the classic tale of Snow White and the Seven Dwarfs just in time to compete with the much maligned Disney criticized woke Snow White revised release date.  Disney is staring down an $8.61+ billion dollar payment to theme park rival and media competitor NBC Universal to complete the purchase of the remaining third of Hulu.  Disney theme park attendance is widely reported to be dismal, perhaps in large part due to punishing price hikes, which is expected to suppress Disney revenues further, going forward.  Disney recent film releases have been resounding flops failing to reach revenue expectations and generating losses.  ESPN is on the block, as are other properties such as ABC, according to reports.  

Enter South Park.  Broadcasting a devastating parody Special Event delving into Disney, CEO Iger, Kathleen Kennedy at Star Wars and Marvel divisions, highlighting serious management missteps, failures, gender and race swapping in classic stories, and the recent collapse of Disney shares by 60 percent.

Enter Nelson Peltz.  Activist investor extraordinaire who has drastically increased his Disney holdings as he promises a proxy fight (if necessary) to seek "multiple" board seats to shake-up Disney.  Possibly selling off the Theme Park Division, and other properties and assets, to restore historical levels of profitability and growth opportunities to the company.  Thousands of new layoffs are expected.  Scuttlebutt suggests CEO Iger may be on his way out prior to his contracts end.  

The South Park Special is so severe none other than Vanity Fair felt the need to publish an article exploring the spot on episode:

https://www.vanityfair.com/hollywood/2023/10/south-park-takes-aim-at-the-woke-disney-culture-wars 

Spoiler alert: South Park has announced it is a trilogy, with two more specials to soon drop.  Like a shoe.  

Given this landscape it might make sense for Cedar Fair to acquire Six Flags.  Combined they could fend off subpar offers from competing players in a consolidating industries of theme parks, entertainment concerns, and IP properties looking for new channels to expand customer engagement and acquisition.  Should Disney spin-off a Theme Park entity it would likely be seeking growth opportunities in prime regional parks such as those held by Cedar Fair, and possibly Six Flags.  

Merlin Entertainments was bought out by private equity Blackstone and is looking to expand.  Sea World Entertainment would become a small fish in a big pond should a Cedar Fair Six Flags merger consummate.  Herschend Family Entertainment would be in a tight corner with limited expansion opportunities.  

Tomorrow morning Cedar Fair has a quarterly conference call with analysts.  It is expected terms of the merger may be announced in this call scheduled for 10:00 am EDT (link to listen live to the call below).

Given the dynamic repositioning, branding, expanding, and turmoil in the Theme Park business, what are we to make of this reports today by respected sources such as The Wall Street Journal, Reuters, Forbes, Bloomberg, Cleveland Plain-Dealer, many reporting merger verification by at least two knowledgeable sources "unauthorized to speak" on the deal.  Translation: it is highly likely to be true, and we can speculate that the "unauthorized" sources may be carefully orchestrated leaks by one or both parties to the proposed merger.  

Concerning questions of who will be acquiring who.  Cedar Fair has the stronger management in industry experience, is has been much more productive in revenue generation than Six Flags (FUN generates more revenue with significantly fewer parks than Six).  Six has gone thru CEO's at a frightening clip.  Six seems not to enjoy the skill set at the management nor board level to be the acquirer.  Also, it is worth noting, FUN has not made a statement repudiating the story.  This silence speaks volumes.  I feel it is most likely FUN will be the acquirer in this transaction should it come to fruition.  

However, it is possible Six Flags may be the acquirer in the event such a transaction would resolve sticky issues such as non-compete or corporate governance issues which could stand in the way of CEO and other top management employment due to covenants or other restrictions (or, of course, to trigger enhanced payments to management due to employment contracts).    

It is likely current CEO Richard Zimmerman many not be ascend to the CEO position of a much larger entity as would result from a FUN/Six combination.  One candidate comes immediately to mind who possess the skill sets for the task: Matt Ouimet (remember, his final task and tenure at Cedar Fair was overseeing acquisitions and growth opportunities.  Recall his departing words about "enjoy[ing] following their future success."

Cedar Fair management could right the Six Flags ship particularly in areas such as revenue management, cost containment, place making, cuisine, parking, marketing, and CRM programs to identify and increase season pass sales and productivity along with food, beverage, and retail revenue enhancements.  Six Flags has payed a heavy price for efforts thus far to eliminate serving in the role as cheap day care for rowdy teenagers and youth.  Revenues and earnings have suffered.  But an important corner has been turned.

How might such a transaction be accomplished?  Likely a stock swap deal, possibly involving some measure of cash.  Due to high interest rates, an all cash deal would likely be prohibitively expensive.  Cedar Fair has conserved cash by reducing the unit holder payout (read, dividend) and reducing debt owing to the proceeds of the recent sale of California's Great Adventure. 

Note Cedar Fair has not projected expected revenue losses going forward which is a bit odd given the CGA revenues will cease with the closure of the park, which could be in as little as three years (possibly longer under the lease agreement).  Cedar Fair has not warned of revenue losses as they likely have been planning an acquisition for some time which would more than offset the loss of a major park.  Six Flags more than fits the bill. 

In any event it shall be FUN to listen to the Quarterly Conference Call with analysts Thursday morning shortly following the pre-market release of the financials:

https://www.cedarfair.com/news 

[Sixflags82]

Welp, it happened

https://www.wsj.com/business/deals/six-flags-cedar-fair-strike-big-theme-park-merger-abbab03f

[WoodVengeance]

13 minutes ago, Sixflags82 said:

Welp, it happened

https://www.wsj.com/business/deals/six-flags-cedar-fair-strike-big-theme-park-merger-abbab03f

 

The article is behind a paywall, but here's some stuff that was noted in it:

• Richard Zimmermann (Cedar Fair) is going to be the CEO for both companies, while Selim Bassoul (Six Flags) is Executive Chairman
• Both offices for Six Flags (Grand Prarie, Texas) and Cedar Fair (Sandusky, Ohio) will be relocated to a new office in Charlotte, North Carolina near Carowinds
• They are going to be using the Six Flags name for the new company, but will still trade under $FUN
• Both the Peanuts and Looney Tunes/DC IPs were mentioned, no other information was listed

Keep in-mind while this is the Wall Street Journal reporting on this, I would still take this with a grain of salt until we hear anything official from Cedar Fair and/or Six Flags. Assuming this is real, I'm hoping that it won't be too much of a change for Kings Island since Richard Zimmermann is still CEO.

 

*Update: Six Flags has confirmed the merger on their website. https://investors.sixflags.com/news-and-events/press-releases/2023/11-02-2023-100020810

[Sixflags82]

6 minutes ago, WoodVengeance said:

 

The article is behind a paywall, but here's some stuff that was noted in it:

• Richard Zimmermann (Cedar Fair) is going to be the CEO for both companies, while Selim Bassoul (Six Flags) is Executive Chairman
• Both offices for Six Flags (Grand Prarie, Texas) and Cedar Fair (Sandusky, Ohio) will be relocated to a new office in Charlotte, North Carolina near Carowinds
• They are going to be using the Six Flags name for the new company, but will still trade under $FUN
• Both the Peanuts and Looney Tunes/DC IPs were mentioned, no other information was listed

Keep in-mind while this is the Wall Street Journal reporting on this, I would still take this with a grain of salt until we hear anything official from Cedar Fair and/or Six Flags. Assuming this is real, I'm hoping that it won't be too much of a change for Kings Island since Richard Zimmermann is still CEO.

https://investors.sixflags.com/news-and-events/press-releases/2023/11-02-2023-100020810

We got an article from Six Flags themselves, it's real...

[WoodVengeance]

It's official, then. Welp, no better time to play this I guess.

 

[DispatchMaster]

13 hours ago, Tr0y said:

They’ve been preparing for this for a while. No wonder Ouimet got voted out.

Ouimet resigned.

3 hours ago, Leland Wykoff said:

Lets start with former Cedar Fair CEO, and Board Member, Matt Ouimet's rather unusual statement, September first, as he unexpectedly resigned his FUN board seat and special role overseeing development and acquisitions:

"I am extremely grateful to have been a member of the Cedar Fair management team and board of directors, I have great confidence in the Company's current leadership team and will enjoy following their future successes."

As I noted and posted in this forum at that time:

"Could Ouimet be foreshadowing a similar future role with another company overseeing acquisitions and development of entertainment, waterparks, amusement parks, and resorts?  A position in which he would be looking for strong management teams overseeing portfolios of desirable cash flow positive properties ripe for application of Intellectual Property assets to leverage value, attendance, and profitability? 

If so, Ouimet would be keen to "enjoy following [Cedar Fair's] future successes" and possibly being a part of that bright future."

First of all, you're putting an awful lot of weight behind what looks like a normal, innocuous "wish everyone well" comment. Secondly, this merger does not fit Ouimet's MO at all. In fact, I'd guess this merger is the reason he resigned so suddenly following his new 3 year seat on the Board.

[BeeastFarmer]

Hilda Bovine is singing.

[IndyGuy4KI]

KIC newsroom announcement. Please continue the news discussion there.

 

[Tr0y]

1 hour ago, DispatchMaster said:

Ouimet resigned.

First of all, you're putting an awful lot of weight behind what looks like a normal, innocuous "wish everyone well" comment. Secondly, this merger does not fit Ouimet's MO at all. In fact, I'd guess this merger is the reason he resigned so suddenly following his new 3 year seat on the Board.

Or was asked to leave? So in a sense he was voted out.

[Tr0y]

1 hour ago, DispatchMaster said:

Ouimet resigned.

Yes but did he resign by his choice or was he given the A or B plan?